Broker tips: Genuit, Clarkson
Analysts at Berenberg reiterated their 'buy' rating on construction firm Genuit on Thursday but acknowledged that the group was now "navigating a tough 2023".
Berenberg noted that in October, Genuit had flagged a deterioration in trading in the third quarter, with its repair, maintenance and improvement unit being particularly hit, and guided for underlying earnings at the lower end of the prevailing £96.8m-100m range.
In the outturn, full-year 2022 underlying earnings came in at £98.2m, with margins "slightly better" than expectations.
"With Genuit's revenues roughly equally split between UK new build, UK RMI and 'other' (infrastructure, commercial and international), it is clearly exposed to a challenging UK macro outlook in FY 2023," said Berenberg, which noted that its base case suggests that the broader UK construction market will fall by roughly 5-6% this year.
That said, the German bank highlighted that its view was also that the company has increasingly positioned itself in the right end-markets, with the right product set, and that it can "whether the downturn well" and that it will be able to take share in the recovery thereafter.
"We cut our expectations for FY 2023-24 back in Q3 2022 and our numbers are effectively unchanged today," concluded Berenberg, which also stuck by its 370.0p target price on the stock.
Over at Canaccord Genuity, analysts hiked their target price on shipping Clarkson from 4,040.0p to 4,325.0p on Thursday, citing cash-backed "quality" earnings per share.
Canaccord Genuity sees full-year pre-tax profits/earnings per share normalising lower year-on-year, with its pre-tax profit estimates upgraded by roughly 10%.
While Canaccord said lower earnings per share were likely, it said there was "significant scope" for dividends per share to progress as shares in the "high return on equity, cash generative, net cash company" offering upside.
"FY22 confirmed again that Clarkson PLC is a leading provider of integrated services, maritime investment banking capabilities, research and green transition advice to the shipping and offshore markets. FY22 also saw margins rise sequentially in all divisions except financial services," said the Canadian bank.
"To us, this suggests that investment in technology and IT is also enabling the company to grow more productively and thus profitably, too. We reiterate 'buy' with a new 4325p target, reflecting cash flow-backed EPS, attractive and well covered >3% dividend yield, and a strong balance sheet. We project dividend progression (>12% CAGR 2022-26E) and see progress as the company invests in new expertise to gain share and protect (and potentially lift) margins."